Walmart Inc. and Tesla Energy Operations Inc. said Friday that they are working out the issues that led the retailer to sue the solar panel maker this week for breach of contract. Walmart said solar panels Tesla installed caused fires atop seven of its stores.
The companies said in a brief joint statement that they "look forward to addressing all issues and re-energizing Tesla solar installations at Walmart stores, once all parties are certain that all concerns have been addressed.
"Together, we look forward to pursuing our mutual goal of a sustainable energy future. Above all else, both companies want each and every system to operate reliably, efficiently, and safely."
Walmart's complaint, filed Tuesday in New York State Supreme Court, alleges gross negligence and failure to follow industry practices in installing, operating and maintaining its rooftop solar-power systems. The Bentonville retailer asks in the suit that Tesla remove the systems it installed on 244 Walmart stores and pay for damages related to the fires.
Tesla Inc.'s energy division, founded by cousins of Tesla founder and Chief Executive Officer Elon Musk, was previously known as SolarCity. Tesla bought SolarCity in 2016.
The case is Walmart Inc. v. Tesla Energy Operations Inc.
According to the complaint, Tesla's systems caught fire on a store roof in Ohio on March 7, 2018; in Maryland on May 21, 2018; and in California on May 29, 2018. "By May 2018, it was clear that Tesla had breached its contractual obligations" to design, install, inspect and maintain the panels "non-negligently and in accordance with prudent industry practices," the document states, and "to handle every aspect of the solar panels' operation on Walmart's roofs in a non-negligent manner."
By November 2018, the complaint states, the Tesla systems had caused fires at seven Walmart stores.
However, court documents also show that tension between the companies was apparently building for more than a year before the suit was filed. A letter from Tesla attorney Fred Norton, dated July 29 and entered as Exhibit 249 in Walmart's lawsuit, was sent to Walmart's attorneys to "follow up on the notice of breach and demand for cure" Tesla sent them on July 8, "and to respond to the retaliatory notice of breach and demand for cure that Walmart delivered the following day."
Norton said in the letter that Tesla installed and operated 248 of the rooftop systems on Walmart stores between 2010 and 2017. Then the Ohio fire occurred in March 2018, followed two months later by a similar "thermal event" in California. The Maryland fire is not mentioned.
After the California fire, Norton said, Walmart demanded that Tesla deactivate the remaining installations at its stores. "Although Walmart had no right (contractual or otherwise) to demand that the unaffected systems be de-energized, Tesla acquiesced to accommodate the request of a valued customer," he said in the letter.
The attorney said Tesla also agreed to inspect each of the systems and fix any problems found.
"This accommodation came at a significant cost," Norton said, "since for most of the systems, Tesla and its investors are paid based on the energy generated by the systems."
Norton then lists repeated delays he says Walmart caused, including contractual disputes, that hampered the inspection and re-energization process.
"Unfortunately, Walmart has not acted with an equal degree of diligence or good faith," he said. "While Tesla has consistently sought to resolve all of Walmart's concerns -- whether it thought those concerns were justified or not -- Walmart has failed to make any concrete progress to re-energizing the systems, and instead continues to impose new conditions, delays, and obstacles."
The letter concludes with Tesla's demand that Walmart comply with the contracts it signed, re-energize the 30 systems that had been inspected and the rest as they are inspected, "and compensate Tesla in full for its losses."
Also Friday, hedge fund investor and longtime Tesla critic David Einhorn said on Twitter that Musk should resign.
"If @Tesla wants to save the human species, it should pay more attention to the safety of its own customers," he said in a tweet. "You shouldn't have to be Walmart to have your dangerous solar panels fixed."
Business on 08/24/2019